City Council
Staff Report
From: City Manager
Report Type: INFORMATION REPORTS
Lead Department: Administrative Services
Meeting Date: March 2, 2026
Report #:2512-5668
TITLE
Sales Tax Digest Q3 2025 (Jul-Sept)
ANALYSIS
This report transmits information regarding the City of Palo Alto’s sales tax receipts for the third quarter (July - September) of 2025. Highlights from the report are included below. Detailed discussion and data can be found in the Sales Tax Digest (Attachment A).
Regional and statewide sales tax - adjusted benchmark year (Attachment A, p. 2):
Palo Alto: decreased by 6.4%
San Francisco Bay Area: decreased by 1.6%
California statewide: decreased by 1.7%
Benchmark year comparisons reflect a rolling four-quarter view of economic activity, adjusted to exclude non-period-related payments.
City’s most significant activity – quarterly year-over-year comparison (Attachment A, p. 1):
Business to Business – Leasing: decreased by 89.1%; represents 2.1% of total sales tax Transportation – New autos: decreased by 5.5%; represents 14.7% of total sales tax These two segments account for over 15% of Palo Alto’s total sales tax for the period and were the primary drivers of the overall decline.
County Pool - quarterly year-over-year comparison (Attachment A, p. 4) City share: decreased from 5.9% to 5.6%, or 30 basis points. Total County pool: increased $0.2 million, from $1.4 million to $1.6 million Over the most recent four quarters, the City received approximately $6.8 million from the County Pool, representing about 19% of the City’s total sales tax revenue of $34.1 million during that period.
ATTACHMENTS
Attachment A: 2025 Q3 Sales Tax Digest Summary
APPROVED BY:
Lauren Lai, Administrative Services Director